Main heading. Nkomati Mine

Transcription

1 Main heading Nkomati Mine 120

2 Corporate Governance report Integrated Annual Report 2012 Corporate Governance The ARM Board of Directors confirms its commitment to the highest standards of corporate governance. Corporate governance encompasses the concept of sound business practice which is inextricably linked to the management systems, structures and policies of the Company. ARM is a public company listed on the JSE Limited (JSE). The Company complies with the JSE Listings Requirements, applicable statutes, regulatory requirements and other authoritative directives regulating its conduct. Save for the exceptions noted in this report, ARM applies the principles set out in the King Report on Corporate Governance for South Africa 2009 and the King Code of Governance Principles (collectively, King III), which came into effect for JSE-listed companies for financial years ending after 1 March ARM complies with additional good governance principles, which qualified the Company for inclusion in the JSE s Socially Responsible Investment Index in As more fully described under the heading Ethics on page 135 of this Corporate Governance report, all the Directors and employees are required to maintain high standards of integrity and ethical behaviour. ARM s business practices are conducted in good faith, in the interests of the Company and all its stake holders, with due observance of the principles of good corporate governance. The unitary Board of Directors (the Board) is the foundation of ARM s corporate governance systems and is accountable and responsible for ARM s performance. The Board retains effective control through a clear governance structure and has established Committees to assist it in accordance with the provisions of ARM s Board Charter. The Board recognises that delegating authority does not reduce the responsibility of Directors to discharge their statutory and common law duties. To ensure consistent standards of governance and internal controls, the Company s subsidiaries and joint ventures have established boards and committees, as appropriate to each entity s legal form. The divisional Chief Executives regularly report to the Board regarding the activities of the divisions. Companies Act The Companies Act 71 of 2008, as amended by the Companies Amendment Act 3 of 2011, and the Regulations promulgated thereunder (the Companies Act) came into effect on 1 May The Board is committed to the implementation of the new Companies Act. Accordingly, in 2012 the Company commenced a programme to achieve compliance with the new requirements imposed upon the Company. Other matters are being addressed within the transition periods set out in the Companies Act, such as the recommen dation to adopt a new Memorandum of Incor poration, to replace the Memorandum and Articles of Association of the Company, which has been included in the Notice of Annual General Meeting on page 249. King III ARM supports the principles and practices set out in King III and has taken steps to ensure that it complies with the recommendations and requirements as a consequence thereof. The Company conducted a gap analysis in August 2010 to assess its compliance level in respect of King III and to identify areas that require improvement. ARM also uses developments and governance trends as an opportunity to review its governance structures. With this objective, provisions impacting the divisions and operations have been and are being identified, assessed and addressed. Gaps, if any, are addressed through action plans and regular monitoring and reporting to the appropriate governance structures. Ongoing progress reports in this regard are presented to the Audit and Risk Committee and the divisional audit committees. A number of policies and procedures have already been implemented. These include the following: The Code of Ethics was revised by the Board in June 2011 and renamed the Code of Conduct. An online Code of Conduct training programme was rolled out in The annual evaluation of the independent status of the Directors is conducted in accordance with King III standards and JSE Listings Requirements criteria. The Company prepared a comprehensive Sustainability Report for F2011, which was independently assured at a moderate (Type II) level of assurance in terms of the AccountAbility AA1000AS (2008) Standard. 121

3 Corporate Governance continued A Combined Assurance Model for ARM has been developed and is being implemented. The model is being rolled out to the divisions. An Information Technology (IT) Governance Framework and Charter as well as the IT Strategy were approved by the Board in August A Legal Compliance and Regulatory Policy was adopted by the Company. A Sustainability Model has been developed and is revised continually to take account of legislative and other changes and best practice. In addition to the stakeholder communication policy included in the Code of Conduct, the development of a more comprehensive stakeholder communication/engagement policy is in progress. The Company has an Executive Director: Corporate Affairs and an Executive: Business Development and Investor Relations and has appointed a Senior Executive: Corporate Affairs for ARM. King III Checklist Apply Partially apply Under review/do not apply Ethical leadership and corporate citizenship Effective leadership based on an ethical foundation Responsible corporate citizen Effective management of the Company s ethics Assurance statement on ethics in the Integrated Annual Report Boards and Directors The Board is the focal point for and custodian of corporate governance Strategy, risk, performance and sustainability are inseparable Directors act in the best interests of the Company The chairman of the Board is an Independent Non-executive Director 1 Framework for the delegation of authority has been established The Board comprises a balance of power, with a majority of Non-executive Directors who are independent Directors are appointed through a formal process Formal induction and ongoing training and development of Directors is conducted The Board is assisted by a competent, suitably qualified and experienced Company Secretary Regular performance evaluations of the Board, its committees and the individual Directors Appointment of well-structured committees and oversight of key functions An agreed governance framework between ARM and the boards of its subsidiaries is in place Directors and executives are fairly and responsibly remunerated Remuneration of Directors and senior executives is disclosed The Company s Remuneration Policy is approved by its shareholders by a non-binding advisory vote Internal audit Effective risk-based internal audit Written assessment of the effectiveness of the Company s system of internal controls and risk management Internal audit is strategically positioned to achieve its objectives 122

4 Integrated Annual Report 2012 Corporate Governance King III Checklist Apply Partially apply Under review/do not apply Audit and Risk Committee Effective and independent Suitably skilled and experienced Independent Non-executive Directors Chaired by an Independent Non-executive Director Oversees integrated reporting 2 A combined assurance model is applied to improve efficiency in assurance activities 3 Satisfies itself of the expertise, resources and experience of the Company s finance function Oversees the internal audit Integral to the risk management process Recommending the appointment of the external auditor Oversees the external audit process Reports to the Board and shareholders on how it has discharged its duties Compliance with laws, codes, rules and standards The Board ensures that the Company complies with the relevant laws and considers adherence to non-binding rules, codes and standards The Board, and each individual Director, has a working understanding of the relevance and implications of non-compliance Compliance risk forms an integral part of the Company s risk management process The Board has delegated to management the implementation of an effective compliance framework and processes Governing stakeholder relationships Appreciation that stakeholders perceptions affect a company s reputation Management proactively deals with stakeholder relationships There is an appropriate balance between its various stakeholder groupings Equitable treatment of shareholders Transparent and effective communication with stakeholders Disputes are resolved effectively, efficiently and expeditiously The governance of information technology (IT) The Board is responsible for IT governance 4 IT is aligned with the performance and sustainability objectives of the Company Management is responsible for the implementation of an IT governance framework 5 The Board monitors and evaluates significant IT investments and expenditure IT is an integral part of the Company s risk management IT assets are managed effectively 123

5 Corporate Governance continued King III Checklist Apply Partially apply Under review/do not apply The Audit and Risk Committee assists the Board in carrying out its IT oversight responsibilities The governance of risk The Board is responsible for the governance of risk and setting levels of risk tolerance The Risk Management Committee assists the Board in carrying out its risk responsibilities The Board delegates the process of risk management to management The Board ensures that risk assessments and monitoring is performed on a continual basis Framework and methodologies are implemented to increase the probability of anticipating unpredictable risks Management implements appropriate risk responses The Board receives assurance on the effectiveness of the risk management process Sufficient risk disclosure is made to stakeholders Integrated reporting and disclosure The Board ensures the integrity of the Company s Integrated Annual Report 2 Sustainability reporting and disclosure is integrated with the Company s financial reporting 2 Sustainability reporting and disclosure is independently assured Explanatory Notes 1 ARM has an Executive Chairman and a Lead Independent Non-executive Director. Additional information may be found under the heading Executive Chairman and Chief Executive Officer on page 125 of the 2012 Integrated Annual Report. 2 The Audit and Risk Committee has had oversight of the preparation of this Integrated Annual Report. 3 The Company is committed to appointing service providers to provide independent assurance on both the financial and non-financial aspects of the business based upon their specific expertise and experience. The Company has developed and implemented a combined assurance model, which is being further refined and rolled out to the divisions. Additional information is available under the heading Risk management programme on pages 136 to 138 of the 2012 Integrated Annual Report. 4 ARM has an IT department under the direction of a Chief Information Officer who reports quarterly to the ARM Management Risk Committee and the ARM Audit and Risk Committee and has a line function reporting to a divisional chief executive. With the assistance of the Company s internal auditors, an IT Governance Framework with processes, procedures and structures was developed by the Company and approved by the Board. The Company s external auditors are assisting the Audit and Risk Committee with determining its responsibilities in assisting the Board with IT governance. 5 Management is responsible for the implementation of IT governance. The role of existing management structures, such as the IT steering committee, is being formalised. Comment from Integrated Reporting & Assurance Services (IRAS): IRAS conducted an assessment of ARM s compliance with King III s apply or explain recommendations, and found no concerns relative to ARM s assertions regarding the specific recommendations. Of the 60 recommendations reviewed, only one was a Not Apply, and two were Partially Apply, with all three accompanied by reasonable explanations. For more information, go to the assurance statement within the 2012 Sustainability Report available on ARM s corporate website: 124

6 Board composition ARM has a unitary Board comprising 14 Directors of whom nine are Independent Non-executive Directors and five are Executive Directors. Curricula vitae of the Board members are provided on pages 150 and 151. Of the Company s 14 Directors, six Directors, or 43%, are black Directors. Two Directors, or 14%, are black female Directors. Director P T Motsepe (Executive Chairman) M P Schmidt (Chief Executive Officer) 1 F Abbott M Arnold Dr M M M Bakane-Tuoane 2 T A Boardman A D Botha J A Chissano W M Gule M W King A K Maditsi Dr R V Simelane Z B Swanepoel A J Wilkens 3 Executive (E) Independent Non-executive (I) 1 Appointed an Executive Director on 1 September 2011 and Chief Executive Officer on 1 March Lead Independent Non-executive Director. 3 Ceased to be the Chief Executive Officer on 1 March Remains an Executive Director. Independence The Board believes that the Independent Non-executive Directors appointed are of the appropriate calibre, diversity and number for their views to carry significant weight in the Board s deliberations and decisions. The Independent Non-executive Directors are highly experienced and have the skills, background and knowledge to fulfil their responsibilities. The classification of Independent Non-executive Directors is determined by the Board on the recommendation of the Nomination Committee in accordance with the guidelines set out in King III. In determining the independence of the Independent Non-executive Directors, character and judgement are considered together with any of their relationships or circumstances which are likely to affect, or could appear to affect, their judgement and with due regard to the criteria for determining independence as set out in King III. Mr M P Schmidt was appointed as an Executive Director on 1 September Mr F Abbott, the former Financial Director of the Company, became a Non-executive Director on 1 August 2009 and on 1 August 2012 became an Independent Non-executive Director. Non-executive Directors are not considered independent if they were executives of the Company or a subsidiary within the preceding three financial years. The independence of Mr Chissano, who receives consultancy fees, was also considered. Given his extensive relationships with E E I E I I I I E I I I I E leaders of African countries, Mr Chissano assists in the facilitation of high-level business discussions and introductions and his specific assignments are determined by the Executive Chairman and the Chief Executive Officer. The fees paid are market-related and are not material and, as such, the Company is satisfied that this aspect does not impair his independence. In accordance with the independence requirements in the JSE Listings Requirements, none of the Independent Non-executive Directors participate in any share incentive scheme of the Company. Executive Chairman and Chief Executive Officer The roles of the Executive Chairman and the Chief Executive Officer are separate and distinct. ARM s Executive Chairman, Mr Patrice Motsepe, contrary to the independence requirements of King III, is an executive representing the Company s largest shareholder, which held 40.84% of the Company s share capital as at 30 June ARM is satisfied that the non-independence of the Executive Chairman is adequately addressed by the composition of the Board and particularly by the appointment of a Lead Independent Non-executive Director, Dr Manana Bakane- Tuoane, in accordance with and as required by King III. In addition to the general requirements for the re-election of Directors set out in the Company s Articles of Association (the Articles), and discussed below, the Executive Chairman is required to be elected by the Board annually. Mr Motsepe was re-elected as Executive Chairman for the period of one year commencing 1 January The Chief Executive Officer is appointed by the Board. Board Charter Integrated Annual Report 2012 The Board Charter, which was approved in May 2009, was amended by the Board in June 2011 to ensure compliance with King III and the new Companies Act. The Board Charter provides guidelines to Directors in respect of, inter alia, the Board s responsibilities, authority, composition, meetings and the need for performance evaluations. The roles and responsibilities of the Board as set out in the Board Charter include the following: determining the Company s purpose, values and identifying its stakeholders and developing strategies in relation thereto; being the focal point for and custodian of good corporate governance by managing the Board s relationship with management, the share holders of the Company and other stakeholders; providing strategic direction and leadership which is aligned to the Company s value system by reviewing and approving budgets, plans and strategies for ARM and monitoring the implementation of such strategic plans and approving the capital funding for such plans; ensuring that ARM s business is conducted ethically and monitoring the ethics performance of ARM; approving business plans, budgets and strategies which are aimed at achieving ARM s long-term strategy and vision; annually reviewing the Board s work plan; monitoring the operational performance of ARM including financial and non-financial aspects relating to such performance; ensuring the sustainability of ARM s business; reporting in ARM s integrated annual report on the going concern status of ARM and whether ARM will continue to be a going concern in the next financial year; Corporate Governance 125

7 Corporate Governance continued determining, implementing and monitoring policies, procedures, practices and systems to ensure the integrity of risk management and internal controls in order to protect ARM s assets and reputation; identifying and monitoring key performance indicators of ARM s business and evaluating the integrity of the systems used to determine and monitor such performance; monitoring and ensuring compliance with the Company s policies, codes of best business practice, the recommendations of King III and all applicable laws and regulations; adopting and annually reviewing the information technology governance framework and receiving independent assurance on such framework; considering, through the Audit and Risk Committee, specific limits for the levels of risk tolerance; defining levels of materiality, thereby reserving certain powers for itself and delegating other matters to management of the Company; ensuring that the Company s annual financial statements are prepared and are laid before a duly convened Annual General Meeting of the Company; ensuring that a communications policy is established, imple mented and reviewed annually and, in addition to its statutory and regulatory reporting requirements, that such policy contains accepted principles of accurate and reliable reporting including being open, transparent, honest, under standable, clear and consis tent in ARM s communications with stakeholders; considering recommendations made to the Board by the Nomination Committee in regard to the nomination of new Directors and the re-appointment of retiring Directors, both as Executive Directors and Non-executive Directors; ensuring that the competency and other attributes of the Directors are suitable for their appointment as Directors and the roles which they are intended to perform on the Board and that they are not disqualified in any way from being appointed as Directors; ensuring that appointments to the Board are formal and transparent and comply with all prescribed procedures; ensuring that a succession plan for the Executive Directors and senior management is implemented; selecting and appointing suitable candidates as members of committees of the Board and the chairmen of such committees; ensuring that annual performance evaluations are conducted in respect of the Board, the Executive Chairman, the Chief Executive Officer and other individual Directors, and Board committees and their respective chairmen; and ensuring that the Board comprises a balance of Executive and Non-executive Directors, with the majority of Non-executive Directors being independent, and ensuring that the Directors are persons who have the relevant knowledge, skills and experience required for governing the Company efficiently. The Board Charter also provides for a clear division of responsibilities to ensure a balance of power and authority, so that no one Director has unfettered powers of decision-making. The Board agreed to postpone a detailed review of the Board Charter until the Company s new Memorandum of Incorporation had been presented to and approved by shareholders. Election, induction, succession and assessment Election The Articles of Association call for one-third of elected Directors, who have been in office longest since their last election, to retire by rotation at each Annual General Meeting. Being eligible, these Directors may seek re-election should they so wish. The tables below set out the Directors who, being eligible, make themselves available for re-election at the Annual General Meeting to be held on Friday, 7 December 2012, together with the years when the Directors who are not standing for re-election in 2012 are required to retire and may stand for re-election. Executive Directors: Appointment and re-election dates* Date first appointed to the Board Due for re-election in 2012** P T Motsepe (Executive Chairman) 5 May 2003 M P Schmidt (Chief Executive Officer) 1 September 2011 M Arnold 1 August 2009 W M Gule 1 December 2004 K S Mashalane*** 9 May 2006 n/a L A Shiels*** 20 February 2008 n/a J C Steenkamp*** 12 May 2003 n/a A J Wilkens 26 October 2004 * In terms of the Company s Articles of Association, one-third of all of the serving Directors shall retire at Annual General Meetings of the Company or, if the total number of serving Directors who shall retire does not constitute a multiple of three, the number of Directors who shall retire shall be the number, adjusted upwards, that is the closest to one-third. ** Should the proposed new Memorandum of Incorporation be adopted by shareholders at the December 2012 Annual General Meeting, Executive Directors will no longer be required to retire by rotation, in accordance with Schedule 10 of the JSE Listings Requirements. *** Ceased to be Executive Directors with effect from 1 June 2012, but remain as senior executives of the Company. 126

8 Non-executive Directors: Appointment and re-election dates* Integrated Annual Report 2012 Corporate Governance Date first appointed to the Board Due for re-election in 2012** Dr M M M Bakane-Tuoane (Lead Independent Non-executive Director) 30 April 2004 F Abbott 30 April 2004 T A Boardman 1 February 2011 A D Botha 1 August 2009 J A Chissano 21 April 2005 M W King 30 April 2004 A K Maditsi 30 April 2004 Dr R V Simelane 30 April 2004 Z B Swanepoel 5 May 2003 * In terms of the Company s Articles of Association, one-third of all of the serving Directors shall retire at Annual General Meetings of the Company or, if the total number of serving Directors who shall retire does not constitute a multiple of three, the number of Directors who shall retire shall be the number, adjusted upwards, that is the closest to one-third. ** Should the proposed new Memorandum of Incorporation be adopted by shareholders at the December 2012 Annual General Meeting, only Non-executive Directors will be required to retire by rotation, in accordance with the JSE Listings Requirements. Messrs P T Motsepe, A D Botha, J A Chissano, A K Maditsi and A J Wilkens are required to retire by rotation. They make themselves available for re-election. The re-election of all of the abovementioned Directors is supported by the Board. Directors appointed by the Board between Annual General Meetings, either to fill a casual vacancy or as an addition to the existing Board, hold office only until the next Annual General Meeting and are eligible for election (but are not included in determining the number of Directors who are to retire by rotation). When appointing Directors upon the recommendation of the Nomination Committee, the Board considers, inter alia, whether the candidates have the necessary skills and experience. The Nomination Committee evaluates nominees and, taking into account past performance and contribution made, recommends such nominees to the Board for recommendation to shareholders for election and re-election at Annual General Meetings of shareholders, as the case may be. The Directors curricula vitae may be found on pages 150 and 151. Induction and continuing education All newly appointed Directors receive a comprehensive information pack, including the Articles of Association, the Board Charter, terms of reference of the committees of the Board, Board policies and other documents relating to the Company; key legislation and regu la tions; as well as corporate governance, financial and reporting documents, including minutes and documents of an administrative nature. Directors are encouraged to attend courses providing information and training relating to their duties, responsibilities, powers and potential liabilities. Regulatory and legislative updates are provided regularly. The Company holds an annual budget planning workshop and a Bosberaad with senior management and the Board to, inter alia, inform Directors about the Company s business. Site visits are also conducted. Succession The Company has a succession plan for Executive Directors and senior management, which provides for the sustainability of the business of the Company. The Company continuously strives to improve its talent pool through a comprehensive and focused plan for management, career development and recruitment. The Company adopts an integrated approach to succession planning. For example, the Social and Ethics Committee regularly reviews reports on leadership and employment equity programmes, and reports on develop ments in these areas to the Board. The Remuneration Committee monitors the remuneration framework, which includes incentives to attract and retain management. As a result, the Board is satisfied that the ongoing efforts to strengthen leadership provide short- and long-term management depth. Following a succession process led by the Nomination Committee, Mr M P Schmidt was appointed the Chief Executive Officer Designate and an Executive Director of the Company with effect from 1 September 2011 to work with Mr Wilkens for six months as part of a hand over process. Mr Schmidt took over as Chief Executive Officer of ARM on 1 March 2012 and Mr Wilkens continues to serve on the Board as the Executive Director: Growth and Strategic Development in the Executive Chairman s office. Assessment The Board is committed to transparency in assessing the performance of the Board, its committees and individual Directors, as well as the governance processes that support Board activities. The effectiveness of the Board and its committees is assessed annually. The most recent assessment was conducted in Independent external advisors assisted the Nomination Committee and the Executive Chairman with evaluations of the Board, its committees, the Executive Chairman and the Company Secretary. The Board is of the view that the involvement of independent external advisors assists to ensure a rigorous and impartial evaluation process. Matters considered in the 2012 assessment focused on the effectiveness of the Board, including: Board composition Board meetings and content Roles of the Executive Chairman and the Company Secretary Board accountability Appointment, induction and training, and succession planning Performance evaluation and remuneration Board Committees Interaction: communication and relationships Board dynamics and leadership Board focus and function: strategy and compliance 127

9 Corporate Governance continued Risk management and internal controls Information Technology Governance Accounting and audit Non-financial (sustainability) performance Balance of power and authority Ethics In the assessment process consideration was also given to the Board s diversity, size and demographics. The findings of the 2012 assessment will be considered by the Board in F2013. Performance assessments of all of the Executive Directors, including the Executive Chairman and the Chief Executive Officer, are completed annually and form the basis of their remuneration, as discussed in the Remuneration report starting on page 139. Board meetings The Board meets at least four times a year to consider the business and strategy of the Company. The Board reviews reports of the Chief Executive Officer, the Financial Director, divisional chief executives and other senior executives, chairmen of the committees and independent advisors. During the financial year ended 30 June 2012, four Board meetings were held. A meeting attendance schedule is set out below. The quorum for Board meetings is the majority of Directors. The Company s annual budget workshop was held in August 2012 as part of the fourth annual Bosberaad for Directors and senior management. Members of the Board and senior executives of the Company consider the budget and review the Company s three-year financial plan. During the strategy sessions, the Company s future strategy is considered in detail. Agendas for Board meetings are prepared by the Company Secretary in consultation with the Executive Chairman, the Chief Executive Officer and the Financial Director. Information provided to the Board is compiled from external sources, such as independent third-party reports, and internally from minutes and plans as well as reports relating to, for example, safety, health, sustainable development, risk, financial, governance and legal matters likely to affect ARM. Meeting materials are delivered to every Director prior to each meeting. Advice and information No restriction is placed on a Director s access to Company information, records, documents and property. Non-executive Directors have access to management and regular interaction is encouraged. All Directors are entitled to seek independent professional advice concerning the affairs of the Company at its expense. Board of Directors: Meeting attendance Aug 11 Dec 11 Feb 12 May 12 P T Motsepe (Executive Chairman) A J Wilkens (Chief Executive Officer until 29 February 2012) M P Schmidt (Chief Executive Officer from 1 March 2012)* n/a F Abbott M Arnold Dr M M M Bakane-Tuoane (Lead Independent Non-executive Director) T A Boardman A D Botha J A Chissano a W M Gule M W King A K Maditsi K S Mashalane** L A Shiels** a Dr R V Simelane J C Steenkamp** Z B Swanepoel a a = apologies * Mr M P Schmidt was appointed to the Board on 1 September ** Messrs K S Mashalane, L A Shiels and J C Steenkamp ceased to be Directors with effect from 1 June

10 Company Secretary All Directors have access to the services and advice of the Company Secretary, Ms Alyson N D Oyley. The Company Secretary is responsible for developing and maintaining the procedures and processes required for the proper administration of Board proceedings, and supports the Board as a whole and Directors individually with guidance as to how to fulfil their responsibilities as Directors in the best interests of the Company. The Company Secretary also guides and advises the Board, and is a resource within the Company on, inter alia, governance and ethics matters and changes in legislation. To achieve these objectives, independent advisory services are retained by the Company Secretary at the request of the Board or its committees. The Company Secretary oversees the induction of new Directors, as well as the ongoing training of Directors. The Board appointed the Company Secretary in accordance with the requirements of the Companies Act. In May 2012, the JSE Listings Requirements were amended to provide that with effect from 1 December 2012 boards must consider and satisfy themselves annually regarding the competence, qualifications and experience of the company secretary. Therefore in August 2012, upon the recommendation of the Nomination Committee, the Board considered details regarding the Company Secretary s competence, qualifications and experience, the salient details of which are set out below as required by the JSE Listings Requirements: Competence Qualifications Experience Competence evaluation by the Nomination Committee and by the Board. BCom, LLB and LLM Many years experience as a Barrister and Solicitor Three years experience as a General Counsel at a listed company Seven years experience as a company secretary The Board also confirmed that the Company Secretary is not a Director of the Company and maintains an arm s-length relationship with the Board. Board Committees The Board has established Committees to assist it with fulfilling its responsibilities in accordance with the provisions of the Company s Board Charter. Nonetheless, the Board acknowledges that the granting of authority to its Committees does not detract from the Board s responsibility to discharge its duties to the Company s shareholders. The Committees have Terms of Reference, which are reviewed annually. They set out the Committees roles and responsibilities, functions, scope of authority and composition. The annual review takes into account amendments to applicable legislation and developments in international best practices. Committees report to the Board at each Board meeting and make recommendations in accordance with their Terms of Reference. In F2011, the Terms of Reference were reviewed by the Committees and amendments to the Terms of Reference were approved by the Board to reflect the requirements under King III and the new Companies Act. In F2012, the Audit Committee and the Social and Ethics Committee Terms of Reference were further amended. Amendments were also made to the Remuneration Committee and Nomination Committee Terms of Reference in August The membership of the Board Committees currently consists solely of Independent Non-executive Directors. Until 29 August 2012, ARM s Executive Chairman was a member of the Nomination Committee; King III provides that the chairman of a board may be a member of a nomination committee. Each Committee is chaired by an Independent Non-executive Director. Attendance schedules for committee meetings held in F2012 are included in each Commit tee report. The Committee Chairmen attend Annual General Meetings of shareholders to answer any questions. The Board has established the following permanent Committees: Audit and Risk Committee, Investment Committee, Nomination Committee, Non-executive Directors Committee, Remuneration Committee and Social and Ethics Committee (formerly called the Sustainable Development Committee). Audit and Risk Committee Members: M W King (Chairman) Dr M M M Bakane-Tuoane T A Boardman A D Botha A K Maditsi Dr R V Simelane Integrated Annual Report 2012 The Audit and Risk Committee is constituted as a statutory committee of the Board in terms of Section 94 of the Companies Act and its composition complies with the provisions of that section. The Audit and Risk Committee comprises six Independent Non-executive Directors, each of whom has extensive relevant experience. In accordance with the guidelines in King III, the Audit and Risk Committee Chairman is an Independent Nonexecutive Director and the Chief Executive Officer attends Audit and Risk Committee meetings at the Committee s request. The Financial Director is also an invitee at each meeting. The Board s amendments to the Audit and Risk Committee Terms of Reference in F2011 and in F2012, following the annual review, meet the requirements of the new Companies Act. Based on the Terms of Reference, a comprehensive agendas framework/workplan is prepared to ensure that all tasks assigned to the Audit Committee are considered at least once a year. The Audit and Risk Committee performs its review function over all ARM operations. To assist the Audit and Risk Committee with its reviews, all operational joint ventures have audit committees. The chairmen of the audit committees of the subsidiaries and joint ventures report to the Audit and Risk Committee, highlighting areas of concern and remedial actions taken by management. In addition, the minutes of audit committee meetings as well as internal and external audit reports of all operations are submitted to the Audit and Risk Committee. Corporate Governance 129

11 Corporate Governance continued The primary objective of the Audit and Risk Committee is to assist the Board in discharging its duties relating to the safeguarding of assets; the operation of adequate systems, internal controls and control processes; and the preparation of accurate financial reports and statements in compliance with all applicable legal requirements, corporate governance and accounting standards; as well as enhancing the reliability, integrity, objectivity and fair presentation of the affairs of the Company. It also oversees financial and other risks in conjunction with the Social and Ethics Committee (formerly called the Sustainable Development Committee). In fulfilling its oversight responsibilities, the Audit Committee reviews and discusses the audited financial statements with management and the external and internal auditors. The Audit and Risk Committee has oversight of the Company s financial reporting process on behalf of the Board. Management has primary responsibility for the financial statements, for maintaining effective internal control over financial reporting, and for assessing the effectiveness of internal control of such reporting. The Audit and Risk Committee, after due consideration, is of the view that the independent registered audit firm, which is responsible for expressing an opinion on the conformity of the audited financial statements with International Financial Reporting Standards (IFRS), is independent of the Company and its management. Upon the recommendation of the Audit and Risk Committee at the Annual General Meeting, shareholders will be requested to re-appoint Ernst & Young Inc. (E&Y) as external auditors of the Company and to re-appoint Mr E A L Botha as the designated individual auditor. E&Y and Mr Botha are registered with the JSE in accor dance with the JSE Listings Requirements. The Audit and Risk Committee meets with the internal and external auditors on a regular basis to discuss the results of their examinations, their evaluation of the Company s internal controls and the overall quality of the Company s financial reporting. The Committee also discusses the overall scope and plans for the respective audits of the Company s internal and external auditors. The principles of the Audit and Risk Committee for the use of external auditors for non-audit services are set out in the formal policy on non-audit services which was updated on 5 May The key principle is that annual non-audit services are not to exceed 5% of the annual audit fee. The Financial Director is authorised to engage the external auditors for matters for which the fee would not exceed R Matters for which the fee will exceed R must be pre-approved by the Audit and Risk Committee. The policy also prescribes permitted non-audit services. In accordance with the JSE Listings Requirements, the Company has a Financial Director, Mr Michael (Mike) Arnold, who was appointed to the Board with effect from 1 August The Audit and Risk Committee reviews the Financial Director s qualifications and experience annually and is satisfied that the Financial Director and finance function are adequately resourced and that Mr Arnold has the necessary experience and expertise to discharge his responsibilities. The Management Risk Committee reports to the Audit and Risk Committee and its report is included on pages 134 and 135 of this Corporate Governance report. During the year under review, the Audit and Risk Committee s performance and effectiveness were evaluated. As a result of that evaluation, the Board is satisfied that the Audit and Risk Committee has complied with its Terms of Reference. The Audit and Risk Committee acts as a forum for communication between the Board, management and the external and internal auditors. It is required to meet at least six times a year. Seven meetings were held during the 2012 financial year. The Report of the Audit and Risk Committee, may be found on pages 156 and 157. Audit and Risk Committee: Meeting attendance Aug 11 Sept 11 Sept 11 Nov 11 Feb 12 March 12 May 12 M W King (Chairman) a 1 Dr M M M Bakane-Tuoane T A Boardman A D Botha A K Maditsi Dr R V Simelane a = apology 1 Mr M W King was excused from the Meeting. Mr A D Botha chaired the Meeting in Mr King s absence. Investment Committee Members: Z B Swanepoel (Chairman) F Abbott A D Botha M W King A K Maditsi The Investment Committee comprises five Independent Non-executive Directors. The Investment Committee s purpose is to consider substantial investments proposed by management, including mining projects, acquisitions and disposals of assets, and to make such recom mendations to the Board as it considers appropriate. The Investment Committee also reviews the results attained on completion of each project. In terms of the Terms of Reference approved by the Board in F2011, the Investment Committee is required to meet at least once a year. Three meetings were held during the 2012 financial year. 130

12 Investment Committee: Meeting attendance Oct 11 March 12 May 12 Z B Swanepoel (Chairman) F Abbott a A D Botha a M W King A K Maditsi a = apologies Nomination Committee Members: Dr M M M Bakane-Tuoane (appointed to the Committee as Chairman from 29 August 2012) J A Chissano (appointed to the Committee on 1 June 2012) A K Maditsi (Chairman until 29 August 2012) P T Motsepe (Committee member until 29 August 2012) Dr R V Simelane The Nomination Committee comprises four Independent Nonexecutive Directors. For additional information in this regard refer to the section entitled Board Committees on page 129 of this Corporate Governance report. The Nomination Committee is responsible, inter alia, for establishing formal and transparent procedures for the appointment of Directors; recommending to the Board suitable candidates for appointment as members of its committees and the chairmen of such com mittees; ensuring compliance with those provisions of the Articles of Association governing the rotation of Directors and making recommendations to the Board with regard to the eligibility of retiring Directors of the Company for re-election. The Nomination Committee is also responsible for developing a formal induction programme for new Directors of the Company, over seeing access by Directors to external continuing professional development programmes for Directors so as to ensure that new Directors are developed through mentorship and training programmes; and ensuring that Directors receive regular briefings on changes in risks, laws and the environment in which ARM operates. The Nomination Committee assists the Executive Chairman to lead the overall performance evaluation, at least once a year, of the Chief Executive Officer and the other Directors in respect of their roles as Directors as well as evaluations of the Board as a whole and its committees. The Nomination Committee assists the Lead Independent Non-executive Director to lead the overall performance evaluation, at least once a year, of the Executive Chairman, with the assistance of the Company Secretary. The Nomination Committee reviews, from time to time, the structure, composition and size of the Board and makes recom men dations to the Board regarding any changes that are considered necessary to enhance the effectiveness of the Board, including recommendations on the general composition of the Board and the balance between Executive and Non-executive Directors appointed to the Board. The Nomination Committee monitors succession planning for the Executive Chairman, the Chief Executive Officer, other Directors and senior management who are not Directors. The Terms of Reference of the Nomination Committee were amended by the Board in August 2012 to provide, inter alia, that the Committee must be chaired by the Lead Independent Nonexecutive Director for as long as the Board has an Executive Chairman. In line with JSE guidance, the Nomination Committee is chaired by Dr Bakane-Tuoane, the Lead Independent Non-executive Director. Mr Motsepe, the Executive Chairman, ceased to be a member of the Nomination Committee with effect from 29 August 2012, and now attends committee meetings as an invitee. The Nomination Committee led the process to identify a successor to Mr A J Wilkens as Chief Executive Officer. Given the importance of the succession of the Chief Executive Officer, all Non-executive Directors and the incumbent Chief Executive Officer were invited to committee meetings during F2011 that dealt with this matter and to attend the interviews of the prospective candidates. In addition to a placement agency, an independent technical advisor was appointed to assist the committee with its deliberations. The results of the search were announced in June 2011 and were effective on 1 September 2011 and 1 March 2012, respectively. In 2012, the Nomination Committee considered reducing the number of Executive Directors on the Board from eight to five in line with global best practice. Following a recommendation to and approval by the Board such changes were made with effect from 1 June In terms of the Terms of Reference at least one meeting must be held per year. During F2012, one meeting was held. For additional information regarding the succession process, please refer to page 127. Nomination Committee: Meeting attendance* A K Maditsi (Chairman until 29 August 2012) P T Motsepe** Dr R V Simelane May 12 * Dr Bakane-Tuoane was appointed to the Committee as Chairman and Mr Chissano was appointed as a Committee Member subsequent to the final meeting of the financial year. ** Mr Motsepe ceased to be a Committee member subsequent to the financial year-end. Non-executive Directors Committee Members: Dr M M M Bakane-Tuoane (Chairman) F Abbott T A Boardman A D Botha J A Chissano A K Maditsi M W King Dr R V Simelane Z B Swanepoel Integrated Annual Report 2012 The committee comprises all of the Independent Non-executive Directors and meets formally on a quarterly basis without management. Currently, all Committee members are Independent Non-executive Directors. The meetings are chaired by the Lead Independent Non-executive Director, Dr M M M Bakane-Tuoane. Corporate Governance 131

13 Corporate Governance continued Terms of Reference for the Committee were approved by the Board in F2011. Amendments were considered by the Committee in F2012; however, no amendments were proposed to the Board. The committee provides a forum for the Non-executive Directors of the Company to consider and discuss issues of importance to ARM, including the promotion of increased investor confidence, stimulating business growth, reducing fraudulent practices through effective business leadership, fostering sustainable long-term growth in both the social and economic arenas, and cultivating and promoting an ethical corporate culture within ARM. Four meetings were held during the 2012 financial year. Non-executive Directors Committee: Meeting attendance Aug 11 Dec 11 Feb 12 May 12 Dr M M M Bakane-Tuoane (Chairman) F Abbott T A Boardman A D Botha J A Chissano a M W King A K Maditsi a Dr R V Simelane Z B Swanepoel a a = apologies Remuneration Committee Members: Dr M M M Bakane-Tuoane (Chairman until August 2012) A K Maditsi (appointed to the Committee in July 2011 and appointed Chairman in August 2012) F Abbott (appointed to the Committee in July 2011) T A Boardman (appointed to the Committee in August 2011) A D Botha The Remuneration Committee is a Board committee comprising five Independent Non-executive Directors. It meets at least twice per year. The Remuneration Committee assists the Board with fulfilling its responsibility for setting the Company s remu neration policies to ensure that these policies are aligned with ARM s business strategy and create value for ARM over the long-term. The Remuneration Committee s responsibilities include, inter alia: ensuring that remuneration policies for the remuneration payable to all employees of ARM have been developed and monitoring of the implementation of such policies; ensuring that, in developing the Company s remuneration policies, the mix of fixed and variable remuneration in cash, shares and other elements of remuneration meets ARM s business needs and furthers its strategic objectives and that there is an appropriate balance between short-term and longterm incentives; ensuring that performance targets in all occupational categories of ARM and its joint ventures are set and monitored; ensuring that the Company s remuneration policies are put to a non-binding advisory vote of shareholders at the Annual General Meeting of the Company; ensuring that independent third-party advisors are engaged with regard to the benchmarking of the remuneration of Executive Directors and senior management; reviewing the results of benchmarking surveys of the remuneration packages of Executive Directors and senior management; recommending basic salaries for Executive Directors to the Board for approval; determining specific remuneration packages for senior management, including but not limited to basic salary; ensuring that remuneration levels accurately reflect the contribution of Executive Directors and senior management; considering and making recommendations to the Board regarding any proposed cash bonus schemes or amendments to any existing cash bonus schemes in respect of the Executive Directors and senior management; ensuring that annual bonuses clearly relate to performance against annual objectives which are consistent with long-term value for shareholders. Individual and corporate performance targets, both financial and sustainability-related, must be tailored to the needs of ARM s business; determining whether any cash performance bonuses will be awarded to any of the Executive Directors and senior management taking cognisance of the respective job descriptions and the performance of ARM against the budgetary and strategic objectives as approved by the Board; regularly reviewing ARM s share-based incentive schemes to ensure the continued contribution of Executive Directors and senior management to shareholder value and guarding against unjustified windfalls and inappropriate gains from the operation of ARM s share-based incentives; considering and making recommendations to the Board regarding any proposed long-term shared-based incentive schemes or amendments to any such existing schemes in respect of the Executive Directors and senior management; determining any grants or awards made pursuant to ARM s long-term share-based incentive schemes including grants or awards to Executive Directors and senior employees of ARM; monitoring long-term (share-based) incentives to ensure that remuneration policies do not encourage behaviour contrary to the Company s risk management policy and strategy; satisfying itself as to the accuracy of recorded performance measures that govern the vesting of long-term (shared-based) incentives; ensuring that management develops appropriate retirement and pension scheme arrangements for employees of the Company; receiving reports from management in regard to all employee benefits including benefits in kind and other financial arrangements to ensure that they are justified, correctly valued and suitably disclosed; ensuring that independent third-party advisors are engaged with regard to the benchmarking and recommendation of Nonexecutive Directors fees; reviewing the results of benchmarking surveys of the fees payable to Non-executive Directors; 132

14 making recommendations to the Board for submission to an Annual General Meeting of the Company regarding Board and committee fees payable to Non-executive Directors; making recommendations to the Board for submission to an Annual General Meeting of shareholders of the Company regarding the fee payable to the Lead Independent Nonexecutive Director for chairing meetings of the Non-executive Directors Committee; ensuring that Non-executive Directors do not receive remuneration contingent upon the performance of ARM; and upon being notified by management of the terms of any agreement with any Non-executive Director, making recommendations, Integrated Annual Report 2012 if required, to senior management or to the Board regarding such agreement. In 2011, the Board determined that the Remuneration Committee s performance would be enhanced by the appointment of additional committee members following the retirement of Mr J R McAlpine on 30 June 2011, and therefore the Board appointed three additional members in F2012. In August 2012, Mr Maditsi was appointed as the Committee Chairman. Dr Bakane-Tuoane remains a Committee member. Four meetings were held during the 2012 financial year. Corporate Governance Remuneration Committee: Meeting attendance July 11 Aug 11 Oct 11 Feb 12 Dr M M M Bakane-Tuoane (Chairman until 29 August 2012) F Abbott* a T A Boardman** n/a A D Botha A K Maditsi (Chairman from 29 August 2012)* * Messrs F Abbott and A K Maditsi were appointed to the Remuneration Committee in July ** Mr T A Boardman was appointed to the Remuneration Committee in August Additional information is provided in the Remuneration report on pages 139 to 145 and the Directors report on pages 159 to 167. Social and Ethics Committee (formerly called the Sustainable Development Committee) Members: Dr R V Simelane (Chairman) F Abbott (resigned from the Committee on 1 June 2012) Dr M M M Bakane-Tuoane A K Maditsi (appointed to the Committee on 1 June 2012) The Company s sustainable development philosophy is underpinned by the realisation that there is a need to turn mineral wealth into sustainable economic growth and development. Through its business endeavours, ARM seeks to act as a catalyst for local, national, regional and international development, to make a lasting and important social, economic and environmental contribution to the developing regions in which ARM operates and to achieve and maintain world-class performance standards in the management of safety, health (occupational), and the environment, Tuberculosis, HIV & Aids and corporate social investment. Social and Ethics Committee: Meeting attendance Aug 11 Nov 11 Feb 12 May 12 Dr R V Simelane (Chairman) F Abbott* a a Dr M M M Bakane-Tuoane * Mr F Abbott resigned from the Social and Ethics Committee in June Mr A K Maditsi was appointed to the Committee subsequent to the final meeting of the financial year. The purpose of the Social and Ethics Committee is to monitor and report on the manner in and extent to which ARM protects, enhances and invests in the economy, society and the natural environment in which ARM operates in order to ensure that its business practices are sustainable. The committee also reviews and considers the efficacy of ARM s systems to promote local economic development opportunities to enable historicallydisadvantaged South Africans to develop economically whilst meeting the requirements of mining rights conversions and other requirements detailed in the Mineral and Petroleum Resources Development Act 28 of 2002 and other legislation. The Social and Ethics Committee Terms of Reference were amended by the Board in May 2011 in compliance with King III and the committee name was amended in August 2011 when the Sustainable Development Committee was renamed the Social and Ethics Committee. The Terms of Reference of the Social and Ethics Committee were further amended with effect from 1 May 2012 to comply with the Companies Act. The Social and Ethics Committee is responsible for: monitoring activities having regard to relevant legislation and other legal requirements and codes of best practice; 133

15 Main heading MMZ plant, Nkomati Mine drawing relevant matters to the attention of the Board; and reporting to the shareholders of the Company at Annual General Meetings. In particular, the Social and Ethics Committee is responsible for monitoring: Social and economic development; Good corporate citizenship; Environment, health and public safety ; Consumer relationships, as applicable; and Labour and employment. The Social and Ethics Committee Terms of Reference provide that the committee must have a minimum of three members, the majority of whom must be Independent Non-executive Directors. Currently, the committee is comprised of three Non-executive Directors, all of whom are independent. Invitees include the Chief Executive Officer of the Company, the Executive Director: Corporate Affairs, the divisional chief executives, the Executive: Business Development and Investor Relations, the Executive: Sustainable Development, the Executive: Human Resources and the Leader: Risk Management. Four meetings were held during the 2012 financial year. Additional information may be found in the Report of the Social and Ethics Committee on pages 146 and 147 of the 2012 Integrated Annual Report, in the Sustainability review on pages 31 to 46 of the 2012 Integrated Annual Report and in the comprehensive stand-alone Sustainability Report available on ARM s corporate website: Ad Hoc Committees The Board has the right to appoint and authorise special ad hoc Committees, comprising the appropriate Board members, to perform specific tasks as required. Management Committees The Company has various management committees comprising Executive Directors and senior executives that are considered essential to the functioning of the Company and ensuring the appropriate control and provision of information to the Board. Executive Committee The Executive Committee was formed in January 2012 and its members meet monthly. The Committee is chaired by the Executive Chairman. Standard items on the agenda include strategic matters, reports from the Chief Executive Officer and the Financial Director and divisional reports, including safety, stakeholder and operational issues. Management Risk Committee Members: M P Schmidt (Chairman) (Executive Director) M Arnold (Executive Director) C Blakey-Milner N Botes-Schoeman J M Bräsler W M Gule (Executive Director) A Joubert (appointed in September 2012) K S Mashalane H L Mkatshana (appointed in September 2012) J M Pistorius D V Simelane J C Steenkamp A J Wilkens (Executive Director) The Management Risk Committee, a management sub-committee of the Audit and Risk Committee, assists the Audit and Risk Committee in discharging its duties relating to risk matters by implementing, co-ordinating and monitoring a risk management plan, policy and processes to ensure that broader strategic and significant business risks are identified and quantified with attendant controls and management assurance. The Management 134

16 Risk Committee s Terms of Reference were amended in F2011 to comply with King III. The Management Risk Committee is chaired by the Chief Executive Officer and its membership includes the Financial Director, the chief executives of the divisions, the Leader: Risk Management, the Executive: Sustainable Development and the Chief Information Officer. With effect from 1 July 2011, the internal auditors were invited to attend one meeting per year. The Chairman of the Management Risk Committee and the Leader: Risk Management attend Audit and Risk Committee meetings and report on the activities of the sub-committee. The Chief Executive Officer and the Chairman of the Audit and Risk Committee report on risk matters to the Board. The Leader: Risk Management and the Executive: Sustainable Development are invited to attend Board meetings to respond to any risk-related matters raised by the Directors. The Management Risk Committee met four times during the 2012 financial year. Additional information regarding the Risk management programme and combined assurance may be found on pages 136 to 138. Steering Committee The Steering Committee is charged with the implementation of approved corporate strategy and other operational matters. The Steering Committee is chaired by the Chief Executive Officer and its membership includes Executive Directors and senior manage ment. It meets quarterly, or more often as required. The Steering Committee members are listed on pages 152 and 153. Growth and Strategic Development Committee The Growth and Strategic Development Committee evaluates growth opportunities. The Committee, which was formed in March 2012 and is chaired by the Executive Director: Growth and Strategic Development, meets weekly, or more often as required. Its members include the Chief Executive Officer, the Financial Director, the Chief Executive: ARM Copper, the Chief Executive: ARM Exploration and Technical Services, the Executive: New Business Development and Investor Relations and the Executive: Corporate Development. Employment Equity and Skills Development Committee The Employment Equity and Skills Development Committee considers employment equity, transformation and skills development strategies throughout the Company. The Company took a decision to combine the employment equity and the skills development management committees six years ago as the com mittees had common goals and addressed issues which are interrelated. Until 30 June 2012, the Committee was chaired by Mr J C Steenkamp. With effect from 1 July 2012, the Committee is chaired by Mr W M Gule, the Executive Director: Corporate Affairs. Its members include the Chief Executive Officer, the Executive: Human Resources, the divisional chief executives, the Senior Executive: Corporate Affairs for ARM, the Executive: Corporate Affairs for ARM Platinum, the Leader: Transformation and other senior executives. The Committee meets monthly, or more often as required. The Committee chairman and the Executive: Human Resources attend and report at Social and Ethics Committee meetings. Treasury Committee The Treasury Committee meets monthly and, if required, more frequently, under the chairmanship of the Financial Director. The Committee membership includes the ARM Finance Executive: Operations, the ARM Finance Executive: Corporate and the Company Financial Manager. Representatives of Andisa Treasury Solutions Proprietary Limited (Andisa), to whom the treasury function is outsourced, attend meetings by invitation. The Treasury Committee reviews operational cash flows, currency and interest rate exposures as well as funding issues within the Company. While not performing an executive or decisive role in the deliberations, Andisa implements decisions taken when required. Advice is also sought from other advisors on an ongoing basis. Comment from Sustainability Assurance Provider: As part of the scope of work to provide independent third party assurance over ARM s sustainability reporting, Integrated Reporting & Assurance Services (IRAS) conducted an assessment of ARM s ethics policies and procedures, in line with King III recommendations. Based on our review, it appears that ARM has a robust system of policies including the recently updated Code of Conduct procedures and controls in place to meet reasonable expectations for monitoring and measuring of ethical compliance. For more information, go to the assurance statement within the 2012 Sustainability Report available on ARM s corporate website: Information Technology Steering Committee The Information Technology (IT) Steering Committee which was formed in November 2007 implements the IT Governance Framework and the IT Strategy adopted by the Board in August 2012 and develops IT policies and procedures. The Committee is chaired by Mr J C Steenkamp, formerly an Executive Director and the Chief Executive of ARM Ferrous and currently the Chief Executive: Exploration and Technical Services. Its members include the Chief Executive: Exploration and Technical Services, the Chief Information Officer, the Chief Executive: ARM Ferrous, various senior ARM Ferrous and ARM Exploration executives, the Executive: Operations Support, senior general managers of Assmang operations and all senior IT project managers from the divisions. The Committee meets quarterly, or more often as required. The Committee chairman and the Chief Information Officer attend and report at Audit and Risk Committee meetings. Ethics Integrated Annual Report 2012 The Company is committed to high moral, ethical and legal standards in dealing with all of its stakeholders. All Directors and employees are required to maintain high standards to ensure that the Company s business is conducted honestly, fairly and legally and in a reasonable manner, in good faith and in the best interests of the Company. These principles are set out in ARM s Code of Conduct (the Code), which was previously known as the Code of Ethics. The Code was amended in F2011 to reflect the Company s obligations under King III and the new Companies Act. A Code of Conduct on-line training programme was rolled out at the corporate office and at the ARM Platinum operations and subsequently will be rolled out to the ARM Ferrous operations. The Code of Conduct may be found on ARM s corporate website: Corporate Governance 135

17 Corporate Governance continued Whistleblowers facility An independent service provider operates ARM s whistleblowers facility to enable employees and other stakeholders to report confidentially and anonymously any unethical or risky behaviour. Information about the facility is included in the Code and contact information is posted in each Company office. Initiatives to heighten awareness of the whistleblowers facility are implemented on an ongoing basis. Formal procedures in place result in each whistleblowing report being investigated and policy and procedures revised, where applicable, with feedback reports being provided to the operators of the ARM whistleblowers facility. No material noncompliance incidents were reported during the year under review. Conflicts of interest The Code includes a policy prohibiting the acceptance of any gift which may be construed as an attempt to influence an employee, regardless of value. The acceptance of any gift is subject to the approval of a member of the executive. Disclosure The Code includes a policy regarding communications, which encourages complete, accurate and timely communications with the public. A more detailed communications policy is being prepared in accordance with King III. The Chief Executive Officer, the Financial Director, the Head of Investor Relations and the Company Secretary oversee compliance with the disclosure requirements contained, inter alia, in the JSE Listings Requirements. Internal control and internal audit The Board, with the assistance of the Audit and Risk Committee, the Management Risk Committee and the internal auditors (outsourced to KPMG Services (Pty) Ltd), reviews the Company s risk profile annually. In terms of the risk-based internal audit programme approved annually by the Audit Committee, the internal auditors perform a number of reviews to assess the adequacy and effectiveness of systems of internal control and risk management. The results of these reviews, together with updates on the corrective action taken by management to improve control systems, are reported to the Audit and Risk Committee and the Board. Going concern On the recommendation of the Audit and Risk Committee, the Board annually considers the appropriateness of the going concern basis in the preparation of the year-end financial statements. Risk management programme ARM s well established and proactive risk management processes underscore ARM s commitment to comprehensive and effective risk management at all levels. ARM recognises that integrating risk management philosophy and practice into its culture is an ongoing process which, in order to be effective, must be a continuous, dynamic and developing endeavour that addresses risks and opportunities across a spectrum, ranging from those associated with strategy and its implementation, to operational, legal, social, ethical and reputational risks and opportunities. The Board tasks the Audit and Risk Committee with oversight of risk management. In view of the importance of this function the Audit Committee has established a management sub-committee, the Management Risk Committee, to assist it with managing and reporting on ARM s risk management processes and procedures. The Management Risk Committee is chaired by the Chief Executive Officer and its members include chief executives of divisions, the Financial Director, the Executive: Sustainable Development, the Chief Infor mation Officer, the Leader: Risk Management and various members of the ARM Steering Committee. ARM Risk Management has championed the integration of risk and assurance processes over many years and this approach not only assists in providing assurance and appropriate corporate governance compliance, but also provides a practical and effective tool for the management of risk within ARM. Reporting on the implementation, co-ordination and monitoring of ARM s risk management policy, programme and approved annual Risk Management Plan takes place at operational, divisional and at Management Risk Committee meetings on a quarterly basis. The structure of reporting on risk management within ARM has been developed and formalised to ensure that the process remains dynamic and is consistent, comprehensive and allows for constant review and refinement. A Risk and Control Dashboard system provides a focused approach to the monitoring of the control effectiveness of risks and processes, ensures that risks are managed within approved levels of tolerance and facilitates a process of continuous improvement. The functional reporting areas and their objectives are set out below: Risk Register/Enterprise Risk Management (ERM) Programme Ensures that a robust system of identifying, quantifying, monitoring, managing and reporting risks and opportunities is applied consistently throughout the Company. ARM continually reviews and updates the ERM Framework, initially based on the Committee of Sponsoring Organisations of the Treadway Commission (COSO) framework of 2004, to ensure it remains consistent with the principles of ISO 31000, the principles of King III and best practice risk management principles and standards. It sets out the ERM process used throughout ARM, provides standards and guidelines and identifies risk tolerance levels for our operations, divisions and the Company. The Management Risk Committee periodically reviews risk tolerance levels, which are approved by the Audit and Risk Committee. The scope of the ERM process extends from addressing principal (strategic, tactical and major operational) risks and opportunities to detailed risk assessments at a process level (as well as for specialised functions) across ARM. The aim is to ensure ARM identifies relevant risks and opportunities, and considers and implements corresponding appropriate, current and effective mitigating strategies and controls. This focus on ensuring implementation of mitigating strategies and effective controls corresponds with the move towards reporting of performance of controls (measured in terms of the risk and control dashboards) and the move away from exception reporting. The ERM process with its focus on risks and attendant controls allows for focused management oversight and more comprehensive reporting to the Management Risk Committee, operations 136

18 and audit committees. It also complements ARM s We do it better management style, which incorporates the principle of continuous improvement. The process of setting control effectiveness performance targets, measuring the quality of assurance and the compliance with risks and processes, provides an effective way of evidencing and monitoring this continuous improvement process. Physical risk management function Ensures that physical risk grading, risk improvement and other risk controls are appropriate, and maintains and enhances performance against agreed international risk standards. While ARM s ERM process addresses all business risks from strategic, tactical and major operational risk to process level risks, in order to ensure focused attention on physical/insurance risk ARM addresses and reports on physical risks and their respective control environments separately and specifically. While operational management remains accountable for risk management, external consultants assist with identifying risk, rating and benchmarking risk management performance, and providing recommendations to improve risk preparedness and to address any potential loss-producing events. This is done by measuring the performance of each operation against ARM s Balanced Scorecard. The Balanced Scorecard measures the quality of risk management (control effectiveness) at individual operations, expressed in rating percentages, and provides a risk profile for each operation. ARM s objective is that all its operations achieve an 80% overall performance rating against the international risk management standards contained in the Balanced Scorecard. ARM also benchmarks its risk preparedness against some 400 mining operations worldwide, rated by International Mining Industry Underwriters (IMIU). The majority of ARM s operations are rated in the top quartile of worldwide operations rated by IMIU. Risk financing and insurance Ensures that ARM s risk financing and insurance programmes are comprehensive and adequately protect the Company against catastrophic risk. Continuing improvement in ARM s risk profile as a result of focused risk control initiatives ensures that cost-effective risk control, financing and insurance programmes are in place to avoid or reduce adverse effects on financial results and Company performance. The principal risks, uncertainties and opportunities are set out on pages 24 and 25. Governance and Risk: monitoring new developments Ensures that the risks arising from new developments in ARM s operating environment are considered on an on-going basis. ARM Risk Management constantly monitors risk issues that stem from new developments, such as non-compliance with changes in corporate governance requirements or codes of practice, to ensure that risk management within ARM remains relevant. The Risk and Control Dashboards which are consistently used at divisional audit committee and ARM Audit and Risk Committee forums, provide a consistent and measurable management assurance metric on the control effectiveness of a broad spectrum of risks and processes. Combined Assurance Integrated Annual Report 2012 ARM s Combined Assurance Model, developed after consultation with management assurance/audit institutions, continues to be refined to ensure integration with ERM processes that have been in place within ARM for a number of years. The ERM process of identifying risks from strategic, tactical and major operational risks through to process level risks at all levels throughout the Company together with corresponding mitigating actions and attendant controls, provides a significant base for the development of the Combined Assurance Status Report (Status Report) which will guide the development and implementation of ARM s Combined Assurance Plan. The approach has been not only to focus on applying the principles contained in King III relative to combined assurance, but more importantly to do so through an effective and efficient process that builds on and complements the ERM work undertaken over the years enabling ARM to streamline and improve its assurance processes. During the implementation phase the draft Status Report will continue to be updated and refined to identify gaps and duplication of assurance. These gaps and duplications of assurance in specific risk and management processes form the basis of determining appropriate internal and external assurance requirements with all stakeholders and form the basis of an on-going Combined Assurance Plan, the results of which will continue to be reported quarterly to the Management Risk Committee, the various joint venture audit committees as well as to the Audit and Risk Committee. A brief overview of the combined assurance process includes: Combined Assurance Model The model sets out the objectives and our approach to combined assurance; describes the three lines of defence (First: managementbased assurance; Second: internal assurance independent from the process; Third: external/independent assurance); defines what constitutes assurance relative to the First, Second and Third levels of defence; identifies the coordinators and sponsors; and sets the measurement criteria for what constitutes the various levels of Quality of Assurance. Combined Assurance Status Report The Status Report provides the framework, format and the reporting for information collated on assurance providers. It enables analysis of assurance provided and the identification of potential gaps and duplications which is considered in the continuing development of the Combined Assurance Plan. Combined Assurance Plan This details the actions required by a variety of stakeholders to ensure appropriate combined assurance based on the risk appetite of ARM. Corporate Governance 137

19 Corporate Governance continued Legal compliance Internal and external legal and regulatory audits are regularly conducted at all operations and any instances of non-compliance with legal or regulatory requirements are reported to management for corrective action. Internal audits are undertaken annually and external audits of safety, health and environmental (SHE) performance at all of ARM s operations, are undertaken biennially. The most recent external SHE audit was conducted in F2011. All findings are being addressed through the risk and non-conformance systems of the different operations. Sixteen corporate standards on risk assessment, legal compliance, water management, waste management, contractor management, biodiversity, waste and emissions management were implemented during F2011. During F2012 the Company did not receive any administrative penalties nor was it fined nor has it been prosecuted for any anticompetitive practices or non-compliance with any legislative or regulatory obligations. A legal and regulatory compliance policy for the Company has been adopted. Chief Executives and senior management report on legal and regulatory compliance to the Management Risk Committee and the Audit and Risk Committee. Mining Charter ARM is committed to the spirit of the Broad-Based Socio-Economic Empowerment Charter for the South African Mining Industry (the Mining Charter), which is to bring about a globally competitive mining industry that draws on the human and financial resources of all of South Africa s people and offers real benefits to all South Africans. The Mining Charter was developed through a consultative process between Government, labour and the mining industry, and was ratified in October Measures for assessing the contribution of mining companies to the socio-economic goals of the Mining Charter were developed. These include the mining scorecard and focus on nine key elements: human resource development; employment equity; migrant labour; mine community and rural development; housing and living conditions; procurement; ownership and joint ventures; beneficiation; and reporting. The Mining Charter was revised in September Revisions included amendments to the scorecard and the nine key elements. A section describing the progress ARM has made against the requirements of the Revised Mining Charter is provided in the 2012 Sustainability Report available on ARM s corporate website: Dealings in securities and insider trading policy ARM enforces closed periods in compliance with legislation and regulation. During these times, Directors, officers and designated persons are precluded from dealing in ARM securities. All Directors and employees are provided with relevant extracts from the Security Services Act 36 of 2004, and the Company s procedures in this regard. Directors and employees are reminded of their obligations in terms of insider trading and the penalties for contravening the regulations. The policy was amended in F2011 following amendments to the JSE Listings Requirements in April Donations to political parties ARM supports South Africa s democratic processes and makes contributions to political parties. A policy relating to making donations to political parties has been adopted by the Company. In the year under review, donations were made to political parties in accordance with the policy and the budget approved by the Board. Investor relations and communication with stakeholders ARM is committed to transparent, comprehensive and objective communication with its stakeholders. The Company maintains a website, which provides information regarding the Company s operations, financial performance and other information. The Company has an Executive Director: Corporate Affairs and an Executive: Business Development and Investor Relations and has appointed a Senior Executive: Corporate Affairs for ARM. Shareholders are encouraged to attend the Annual General Meeting and to use this opportunity to engage with the Board and senior management. Summaries of the results of decisions taken at shareholders meetings are disclosed on the Company s website following the meetings. The Company s stakeholder communication policy is included in the Code of Conduct. The development of a more comprehensive stakeholder communication/engagement polity is in progress. ARM s investor relations department is responsible for communication with institutional shareholders, the investment community and the media. The Company has developed a comprehensive investor relations programme to communicate with domestic and international institutional shareholders, fund managers and investment analysts. Engagements include participation by ARM senior executives in one-on-one meetings with institutional investors in South Africa, the United Kingdom, North America and Singapore, through investor roadshows and conferences. Additional information regarding investor relations and communication with stakeholders may be found in the Investor Relations report on pages 243 to 246 and in the 2012 Sustainability Report available on ARM s corporate website: Annual General Meeting The Notice of the Annual General Meeting may be found on pages 249 to 256. Sponsor Deutsche Securities (SA) (Pty) Ltd is the Company s sponsor, in compliance with the JSE Listings Requirements. The complete policy governing dealings in Company securities and insider trading may be found on ARM s corporate website 138

20 Remuneration report Integrated Annual Report 2012 Corporate Governance Role of the Remuneration Committee In 2005, ARM embarked on an aggressive growth strategy with the objective of doubling the size of the Company. This was achieved in ARM is focussed on continuing to grow in its portfolio of commodities. ARM has world-class resources and excellent partnerships to achieve its strategic objectives. ARM recognises that this strategy can only be delivered with the foresight, dedication and hard work of management and employees. It is also recognised that the Company competes for a small talent pool and set of competencies within the global and South African mining industries. South African mining talent is regarded as among the best in the world and is in demand in most mining countries. The growth in African mining escalates the risk of the loss of key talent. ARM s own growth and additional demand for talent is contingent on the Company s attraction and retention strategies in terms of current and potential employees. The Remuneration Committee acknowledges its responsibility to apply the remuneration strategy to ensure a fine balance in attracting and retaining employees through competitive remuneration practices, while creating shareholder value. Supporting a progressive Remuneration policy are ARM s succession planning, human resources development and manpower planning process, which aim to ensure the appointment of competent and experienced individuals to realise the Company s growth expectations and growth strategy. This forms a critical component of the total Employee Value Proposition and our objective to be an Employer of Choice. These elements are discussed in more detail in the Sustainability Report available on ARM s corporate website: Composition of the Remuneration Committee Members: Dr M M M Bakane-Tuoane (Chairman until August 2012) A K Maditsi (appointed to the Committee in July 2011 and appointed Chairman in August 2012) F Abbott (appointed to the Committee in July 2011) T A Boardman (appointed to the Committee in August 2011) A D Botha In accordance with King III, the Remuneration Committee consists entirely of Independent Non-executive Directors. The Board considers the composition of the Committee to be appropriate in terms of the necessary blend of knowledge, skills and experience, and that the members have a strong blend of expertise and experience in the financial and human capital fields. Functions of the Remuneration Committee and Terms of Reference Purpose The purpose of the Committee is to assist the Board with its responsibility for setting the Company s remuneration policies to ensure that these policies are aligned with ARM s business strategy and create value for ARM over the long term. The Committee also assists the Board to promote a culture that supports enterprise and innovation with appropriate short-term and longterm performance related rewards that are fair and achievable. Functions and responsibilities As set out in greater detail on pages 132 to 133, the Committee must perform the functions and responsibilities necessary to fulfil its purpose as stated in the previous paragraph, including the following: ensuring that policies for the remuneration payable to all employees of ARM have been developed, and monitoring their implementation; ensuring that, in developing the Company s remuneration policies, the mix of fixed and variable remuneration in cash, shares and other elements of remuneration meets ARM s business needs and furthers its strategic objectives and that there is an appropriate balance between short-term and long-term incentives; ensuring that performance targets in all occupational categories within ARM and its joint ventures are set and monitored; and ensuring that the Company s remuneration policies are put to a non-binding advisory vote by shareholders at the Annual General Meeting. It is also the responsibility of the Remuneration Committee to ensure alignment with the remuneration guidelines of King III. The Remuneration Committee is satisfied that the Company is indeed so aligned. Committee activities The Remuneration Committee met four times during F2012. The scheduled work plan was followed with the normal cycle of activities that included, but was not limited to, the following: The recommendation to the Board of the annual increases in the base salaries of Executive Directors. The approval of the annual increases in the base salaries of senior management. The approval of the annual bonuses paid to Executive Directors and senior management in terms of the Out Performance Bonus Scheme. The approval of the annual offers of share-based instruments under The African Rainbow Minerals Share Incentive Scheme (the Scheme) and The African Rainbow Minerals Limited 2008 Share Plan (Share Plan). The recommendation of the Board retainer and Board and Committee meeting attendance fees for Non-executive Directors to the Board, for submission to shareholders. Review of the deferred bonus/co-investment scheme under the Share Plan. The review of the Remuneration Policy. The review of the conditions of employment and benefits to ensure that they are reasonable in terms of best practices. During F2012 ARM achieved the 6th place in the giant size company category and was certified as a Best Employer South Africa 2012/2013 by the CRF Institute. ARM was audited in the following categories: Primary benefits Secondary benefits and working conditions Training and development Career development Culture management This indicates that ARM s remuneration and benefits policies and practices (primary and secondary benefits elements 1 and 2) measure extremely well against South African and international practices. 139

21 Remuneration report continued The Chief Executive Officer, Financial Director and the Chief Human Resources Officer attend Committee meetings by invitation and assist the Committee in its deliberations, except when issues relating to their own remuneration are discussed. No Director was involved in deciding his or her remuneration. The Chairman of the Remuneration Committee attends Annual General Meetings to answer any questions from shareholders. Additional information may be found under the heading Remuneration Committee in the Corporate Governance report on pages 132 and 133. Advisors to the Remuneration Committee In F2012 the Remuneration Committee was advised by Deloitte, which provided, inter alia, market bench-marking information on executive remuneration, and also advised on and assisted with the design, implementation and verification of calculations pertaining to offers and awards pursuant to short- and long-term incentive plans. All short- and long-term incentive calculations are audited by either the Company s internal auditors (KPMG) or, at financial yearend, by the external auditors Ernst & Young Incorporated. The Remuneration Committee and the Company also made use of the professional services and advice of PricewaterhouseCoopers (PwC)/Remchannel and Compensation Technologies to conduct Non-executive Director fees and conditions of employment surveys and benchmarking for other management and employee categories. This was aimed at ensuring overall competitiveness. Non-binding advisory vote Chapter 2 of King III, which deals with Boards and directors, requires a company to table at its annual general meetings its Remuneration policy for approval by share holders of the company by a non-binding advisory vote. This vote enables shareholders to express their views on a company s remuneration policy and on its implementation. Remuneration Philosophy and Policy: Executive remuneration Principles of executive remuneration ARM s executive remuneration philosophy aims to attract and retain high-calibre executives, and to motivate and reward them for developing and implementing the Company s strategy to deliver consistent and sustainable shareholder value. The Company demonstrates: the ability to attract top talent throughout the Group, as 95% of all job offers made were accepted; the ability to retain that top talent, as the annual turnover is only 1.9% with no turnover in top management; a management team that realises the slogan of We do it better and consistently achieves and exceeds business targets, meets project budgets and timelines and thereby creates sustainable shareholder value; and a management team that has delivered on the Company s strategy since 2005 and achieved its strategic objectives. The Remuneration policy conforms to best international practice and is based on the following principles: total rewards are competitive with those offered by other employers in the mining and resources sector; incentive-based rewards are earned through the achievement of performance targets consistent with shareholder expectations over the short- and long-term; annual cash incentives, together with performance measures and targets, which are structured to reward effective operational performance; and long-term (share-based) incentives that are used to align the long-term interests of management with shareholders and that are responsibly implemented, so as not to expose shareholders to unreasonable or unexpected financial impact. Ordinary resolution number 9 (included in the Notice of Annual General Meeting) is of an advisory nature only and failure to pass this resolution will therefore not have any legal consequences relating to existing arrangements. However, the Board and the Remuneration Committee will take the outcome of the vote into consideration when considering the Company s Remuneration policy. Additional information may be found in the Notice of Annual General Meeting on pages 249 to

22 Integrated Annual Report 2012 Corporate Governance Base salaries Performance shares Bonus shares Benefits Remuneration: Executive Directors The African Rainbow Minerals Limited 2008 Share Plan Long-term incentives The African Rainbow Minerals Share Incentive Scheme (1998) Annual cash incentives Share options Elements of executive remuneration Base salaries (i.e., fixed salaries) Benefits Annual cash incentives Long-term (share-based) incentives The Remuneration Committee seeks to ensure an appropriate balance between the fixed- and performance-related elements of executive remuneration, and between those aspects of the package linked to short-term financial performance and those linked to longer term shareholder value creation. The Committee considers each element of the remuneration package relative to the market and takes into account the performance of the Company and the individual executive in determining both quantum and design. For additional information regarding Executive Directors emoluments for F2012, refer please to the Directors report on pages 161 to 166. The policies relating to the four components of executive remuneration are summarised in the table below. Policy Basis of delivery Base salaries: The salaries of Executive Directors and other senior executives are benchmarked against market practices, other South African mining companies that are comparable in size, business complexity and international scope. Normally reflect market median levels based on role and individual skills and experience. Base salaries of key individuals are aligned with salaries in the upper quartile of the resource market. Benefits: Retirement/Pension Fund: Membership of the ARM Pension Fund is compulsory. Executives, if already members of a recognised industrial pension/retirement fund such as Sentinel, may remain members if so elected. Medical scheme: It is compulsory to belong to a medical scheme. Base salaries: Monthly in cash. Reviewed annually, with changes taking effect annually on 1 July. Increases in base salary are also determined by Company performance, individual performance and changes in responsibilities. Base salary forms part of and is the major component of a total cost-tocompany (TCTC) package, which also includes Benefits. Participation in short- and long-term incentive schemes is calculated on the basis of and in addition to the TCTC package. Benefits: Contributions are made by executives from the TCTC base salary. The ARM Pension Fund is: Managed by eight trustees of whom 50% are appointed by ARM and 50% are elected by the members. Administrated by Alexander Forbes. A defined contribution fund. Executives may participate in any managed medical aid plan of their choice. 141

23 Remuneration report continued Policy Other benefits and conditions of employment: All other conditions of employment are comparable to those of the mining and resources sector and conditions do not differ from the rest of the employees in the company. No special or extraordinary conditions are applicable to executives. Annual cash incentives: Incentivised achievement of annual objectives and sustained performance against comparative and absolute targets are rewarded. Executive Directors and senior executives are allowed the prior voluntary deferral of either 25%, one third or 50% of any bonus calculation into co-investment shares (see page 144 of this Remuneration report for details). Long-term (share-based) incentives: ARM share-based incentives are based on two schemes: The African Rainbow Minerals Share Incentive Scheme; and The African Rainbow Minerals Limited 2008 Share Plan. Basis of delivery Other benefits and conditions of employment: Adjustments are made to the TCTC depending on the benefits selected by employees, e.g. car allowances. Annual cash incentives: On-target bonus percentages are established by the Remuneration Committee in terms of ARM s overall reward strategy; however, the Out Performance Bonus payable at year-end depends upon actual Company performance against a weighting of: targeted profit from operations in each of the operational clusters; and targeted unit cost of sales in each of the mineral clusters. The weighting of the metrics in the bullet point above applied to each member of the executive is in relation to his or her sphere of influence. The Remuneration Committee establishes thresholds and targets for each metric in accordance with the Board approved business plan, and reviews the measures annually to ensure that they are appropriate, given the economic climate and the performance expectations for the Company. A performance managed incentive scheme based on profit applies to non-executive employees at corporate level. At operational level, the incentive bonus for all employees, payable at financial year-end, depends upon actual operational performance against a weighting of the following: targeted profit from the operations; targeted operational unit cost of sales in each of the mineral cluster(s); and targeted operational production. Health and safety is either an additional measure or penalty. The weighting of the above metrics is applied to each employee in relation to his or her sphere of influence. Non-executive Directors are not incentivised. Long-term (share-based) incentives: Prior to 2008, ARM s only form of long-term incentive was a long-standing share option scheme inherited from Anglovaal Mining Limited (Avmin), now referred to as The African Rainbow Minerals Share Incentive Scheme (the Scheme). Following developments in the tax, accounting and regulatory treatments of share-based incentives, together with evolving local and international best practice, various adjustments were made to the manner of its implementation to bring it in line with these developments. This was done within the parameters of the original approval by the JSE and shareholders. Additionally its reward impact was significantly reduced, but then supplemented by The African Rainbow Minerals Limited 2008 Share Plan (the Share Plan), approved by shareholders at the 2008 Annual General Meeting and subsequently amended at the 2010 Annual General Meeting. ARM s long-term (share-based) incentives now consist of: performance shares; bonus shares; and share options. Performance shares are awarded and bonus shares are granted pursuant to the Share Plan. Share options are offered under the Scheme. The resulting compound (hybrid), share-based incentive programme aligns ARM with best international practice; provides for the inclusion of a number of performance conditions, designed to align the interests of executives with those of the Company s shareholders; acts as a retention tool; and rewards executives for Company performance above that of the performance of the economy or the mining and resources sector. All ARM corporate employees at managerial levels are eligible participants. 142

24 The implementation of the share-based incentives is described below: Performance share method The performance share method aligns the interests of shareholders and executives by rewarding superior shareholder return in the future, and by encouraging executives to build a shareholding in ARM. In terms of the Share Plan, conditional awards of full value performance shares have been made to executives annually since These awards vest after a performance period of three-years or four years, as the case may be, subject to the Company s achievement of pre-determined performance criteria, set by the Remuneration Committee at the time that awards are made. Performance criteria Until F2011, the performance criteria for the vesting of the performance shares were defined in terms of the achievement of a Market Price Appreciation (MPA) performance, in comparison to the 20 companies then comprising the constituent members of the FTSE/JSE Resources Index (RESI 20). This approach to performance vesting was selected on the basis that it incentivises the creation of shareholder value. The MPA for this purpose is defined to be the increase in value of a portfolio of shares purchased on a specified date, holding the shares until the third or fourth anniversary of the purchase date, as the case may be, and then selling the portfolio on that day. Since F2011, as a result of the reduction in the number of constituent members of the FTSE/JSE Index from 20 (RESI 20) to 10 (RESI 10) the performance criteria for the vesting of the performance shares, both prior awards and subsequent awards, are now defined in terms of the achievement of MPA performance, in terms of the RESI 10. For performance shares awarded prior to 1 November 2011 and performance shares awarded on or after 1 November 2011 to participants other than senior executives, the MPA is determined over a three year performance period. For performance shares awarded on or after 1 November 2011 to senior executives, the MPA is determined over a four year performance period. Vesting Conditional performance shares awarded to participants prior to 1 November 2011 and conditional performance shares awarded to participants other than senior executives after 1 November 2011 vest and are settled after a performance period of three years, subject to the achievement of predetermined criteria. In 2011 the Board, upon the recommendation of the Remuneration Committee, resolved to extend the vesting period of awards made after 1 November 2011 to senior executives from three years to four years and to assess the performance criteria annually commencing after two years. Integrated Annual Report 2012 Since F2011 additional awards of performance shares may be made in terms of the deferred bonus/co-investment scheme, described below. For additional information regarding performance share awards, please refer to the Directors report on pages 162 to 163 and 166 to 167. Bonus share method The bonus share method is an additional share-based incentive for those executives who, through their performance on an annual basis, have demonstrated their value to the Company. It also encourages executives to build a shareholding in ARM. In terms of the Share Plan, annually since 2008, participants have received a grant of full value ARM shares that match, according to a specified ratio, a portion of the annual cash incentive accruing to them. All bonus shares granted to participants prior to 1 November 2011 and bonus shares subsequently granted to participants other than senior executives vest and are settled after three years, subject to continued employment with the Company. However, the purpose of the bonus share method is to retain senior executives for the long term, and in order to achieve this objective, the Board, upon the recommendation of the Remuneration Com mittee, resolved in 2011 to extend the vesting period for bonus share grants made to senior executives on or after 1 November Such bonus shares will vest and be settled after four years, subject to continued employment with the Company. Since F2011 additional grants of bonus shares may be made in terms of the deferred bonus/co-investment scheme, described below. For additional information regarding bonus share grants, please refer to the Directors report on pages 163 to 164 and 166 to 167. Share option scheme Annual allocations of share options in terms of the Scheme are made to executives, but at a much reduced scale following the adoption of the Share Plan. Share options vest in total on the third or fourth anniversary of their allocation. Executives may elect to defer exercising any share option until the eighth anniversary of its allocation. The Scheme was amended in December 2010 to allow the Company to offer participants the opportunity to net settle share options when they exercise such options. For additional information regarding share option allo ca tions, please refer to the Directors report on pages 164 to 167. Corporate Governance 143

25 Remuneration report continued Deferred bonus/co-investment scheme In February 2011, the Remuneration Committee approved a deferred bonus/co-investment scheme, in which executives may invest in additional bonus shares which are matched by the Company with performance shares under the existing terms and conditions of the Share Plan. Executives and senior managers are offered the opportunity, before the end of March each year, to elect that a portion (25%, one third or a maximum of 50%) of any bonus calculated at the end of the performance year, is deferred and converted into an equivalent value of bonus shares. Additionally, any portion of the calculated bonus above a certain threshold (Rand) level is to be deferred on a compulsory basis and converted into an equivalent value of bonus shares. The remainder of the bonus, after any elective or compulsory deferral, will accrue to executives and be paid out in cash. To encourage executives to take up the deferral(s), the deferred bonus shares are matched with performance shares according to prescribed ratios. The vesting period(s) of both deferred bonus shares and matching performance shares will be three years. The performance criteria for the matching performance shares will be identical to that adopted for the Share Plan, but the performance period will remain at three years and there is only one performance assessment. The deferred bonus share element will be utilised to enhance the retention characteristics of the current reward of Executive Directors and senior management. The Company is of the view that the deferral of a portion of immediate cash bonuses demonstrates a heightened commitment to performance and shareholder alignment, and enhances both the retention of employees and the performance and shareholder alignment characteristics of the Share Plan. Although the deferred bonus shares will still be at risk to share price volatility, a high level of reward certainty exists for the grantees, as the only performance criteria associated with the vesting of the bonus shares is a grantee s continued employment. Performance and shareholder alignment will be enhanced by the matching of the deferred bonus shares with additional performance shares in specific ratios that reflect the risk/reward characteristics the Company wishes to operate under. Summaries of long-term incentives The number of performance shares, bonus shares and share options offered to and accepted by participants, along with an analysis of share-based payments accruing to Executive Directors and to Prescribed Officers, is provided in the Directors report on pages 162 to 167. Service contracts: Executive Directors Employment agreements have been entered into between the Company and the Executive Directors, namely Messrs Motsepe (Executive Chairman), Schmidt (Chief Executive Officer), Arnold (Financial Director), Gule (Executive Director: Corporate Affairs) and Wilkens (Executive Director: Growth and Strategic Development). These contracts are subject to a one calendar month s notice period by either party. None of the employment contracts is a fixed-term contract. The remuneration paid in terms of the executive employment agreements with the Executive Directors is set out in detail on page 161 of the Directors report. Executive Directors are not paid by the Company for their services and duties as Directors of the Company. They only receive remuneration in terms of their employment relationship with the Company. The Company has not concluded any agreements with its Executive Directors to pay a fixed sum of money on termination of employment. There are no other service contracts between the Company and its Executive Directors. Remuneration policy: Non-executive Directors remuneration Non-executive Directors fees The Board appoints high-calibre Non-executive Directors who contribute significantly to the Company s strategic direction. On the advice of the Remuneration Committee, which engages independent third-party advisors to assist with the benchmarking of Directors fees to comparable companies, the Board considers and makes recommendations to shareholders regarding Directors fees payable. In determining the level of fees, consideration is given, inter alia, to the importance of attracting and retaining experienced Non-executive Directors, market dynamics and the increasingly demanding responsibilities of Directors as well as the contributions of each Director and their participation in the activities of the Board and its committees. Board retainers and Board and committee meeting attendance fees are paid quarterly and in arrears. Board attendance fees are paid for site visits and seminars. The Company reimburses reasonable travel, subsistence and accommodation expenses to attend meetings, however, office costs, including telecommunication costs, are deemed to be included in the Board retainers. Full details regarding the fees paid to Non-executive Directors are provided in the Directors report on page 162. Board retainers and per meeting attendance fees On the advice of the Remuneration Committee, the Board recommends an annual retainer and meeting fees for attendance at Board meetings payable to Non-executive Directors for approval by shareholders. A comprehensive benchmarking exercise was performed on Nonexecutive Directors Board fees using Deloitte surveys, PwC surveys and Annual Reports of various similar-sized companies in the resources sector. Based upon the outcome of this exercise, a proposed 6% per annum increase (rounded to the nearest R50) in retainer fees and Board meeting attendance fees to be paid to Non-executive Directors will be submitted for approval to shareholders at the Annual General Meeting scheduled to be held on Friday, 7 December This will bring the Company s Board retainers and per meeting fees more in line with the market and ensure that ARM retains the skills and experience of its Nonexecutive Directors. Executive Directors do not receive Directors fees. 144

26 Annual Board retainers and meeting attendance fees Integrated Annual Report 2012 Corporate Governance 2012/13 Fees (Rand)* 2011/12 Fees (Rand)** Annual Per meeting Annual Per meeting Independent Non-executive Director Non-executive Director * Effective 1 July 2012, should the increase be approved by shareholders at the Annual General Meeting. ** Effective 1 July Committee meeting attendance fees The Company also conducted a comprehensive third-party benchmarking exercise on Non-executive Directors committee meeting attendance fees, including the use of Deloitte s surveys. On the advice of the Remuneration Committee, the Board recommends for approval by shareholders an increase in the committee meeting attendance fees payable to Non-executive Directors of 6% per annum (rounded to the nearest R50) for the Audit and Risk Committee and 10% per annum (rounded to the nearest R50) for all other committees, as set out in the table below. The level of such committee attendance fees reflects the impact, influence and risk component of a committee s role in achieving the Company s objectives as well as the experience of the committee members. The fees provide remuneration for preparation for and attendance at meetings. Committee meeting attendance fees 2012/13 per Meeting fees (Rand)* 2011/12 per Meeting fees (Rand)** Audit and Risk Committee Chairman Member Investment Committee, Nomination Committee, Remuneration Committee and Social and Ethics Committee Chairman Member * Effective 1 July 2012, should the increase be approved by shareholders at the Annual General Meeting. ** Effective 1 July Fee for the Lead Independent Non-executive Director On the advice of the Remuneration Committee, the Board recommends for approval by shareholders an increase of 12% (rounded to the nearest R50), effective 1 July 2012, of the fee of R to R per meeting to be paid to the Lead Independent Non-executive Director for chairing the formal, quarterly meetings of the Non-executive Directors Committee, which are held without management. Please refer to the Notice of Annual General Meeting on pages 249 to 256. Service contracts: Non-executive Directors In addition to Directors fees, Non-executive Directors may receive advisory fees in terms of agreements or other service contracts, concluded at market rates, for defined and pre-approved services. An agreement has been entered into between the Company and Mr Chissano to perform services on behalf of the Company. The renewable contract is subject to one month s termination notice by either party. There are no other service contracts between the Company and its Non-executive Directors. No agreements to pay a fixed sum of money on termination of contract have been concluded between the Company and any of its Non-executive Directors. Details regarding amounts paid in F2012 in terms of service contracts with Non-executive Directors are provided in the Directors report on page

27 Report of the Social and Ethics Committee This report is provided by the Social and Ethics Committee (Committee) in compliance with Regulation 43(5)(c) of the Companies Act 71 of 2008, as amended (the Companies Act). Composition and Terms of Reference This statutory Committee was established on 23 August It was previously called the Sustainable Development Committee. With effect from 1 May 2012, the Committee s Terms of Reference were amended by the Board of Directors (the Board) to elaborate on the Committee s role and responsibilities in terms of the Companies Act. The Committee monitors and oversees those functions set out in the Companies Act as well as those responsibilities assigned to it by the Board. Information on the composition of the Social and Ethics Committee, its Terms of Reference and its procedures are set out more fully in the Corporate Governance report on pages 133 and 134 of the 2012 Integrated Annual Report, of which this report forms a part. At the Annual General Meeting, the Committee chairman will report to shareholders on the Company s performance with respect to relevant legislation and codes of best practice, social and economic development, labour, and safety, health and the environment. Purpose and Functions Legislation and Codes of Best Practice The Committee is responsible for monitoring the Company s activities, having regard to any relevant legislation, other legal requirements and prevailing codes of best practice in the areas set out in the Companies Act. In respect of legal and regulatory requirements, during the year under review the Committee, inter alia: discharged those regulatory obligations of a social and ethics committee as prescribed by Companies Regulation 43(5); monitored complaints received via ARM s whistleblowers hotline, including complaints or concerns regarding sustainable development matters; and considered reports provided by management regarding compliance with legal and regulatory requirements in terms of the Company s Legal and Regulatory Compliance Policy; received reports regarding the on-going Competition Act compliance training programme. received a report regarding the biennial safety, health and environ mental internal audits, including compliance with the National Environmental Management Act and the National Water Act; and monitored compliance with the Mining Charter and the Department of Trade and Industry targets as well as the Company s status in respect of standards of best practice, including International Council on Mining & Metals guidelines and membership requirements. The Company is committed to high moral, ethical and legal standards in dealing with all of its stakeholders. All the Directors and employees are required to maintain high standards to ensure that the Company s business is conducted honestly, fairly and legally and in a reasonable manner, in good faith and in the best interests of ARM. These principles are set out in ARM s Code of Conduct. The Committee received and considered reports regarding the Code of Conduct on-line training programme, which was introduced at the Company s corporate office and ARM Platinum during F2012. The Company reviewed its initiatives to counteract risks of fraud, bribery and corruption. As more fully described on page 136 of the Corporate Governance report the Company has a whistle blowers policy and the Committee received reports regarding the results of investigations of calls made to the independent whistleblowers hotline facility. Social and Economic Development ARM seeks to make a significant contribution towards addressing challenges confronting South Africa, including poverty alleviation, job creation, education, welfare and healthcare. The Committee monitored and reviewed the implemen tation of policies regarding adding value to and giving to the communities in which ARM operates including: corporate social responsibility; local economic development, including: infrastructure, enter prise development, and community development projects committed under the social and labour plans; and the ARM Broad-based Economic Empowerment Trust projects. The Committee specifically focussed on commitments in the priority areas identified by the Committee, i.e., (i) health, (ii) education, (iii) sporting events, (iv) community capacity building, (v) arts and culture, (vi) job creation, and (vii) infrastructure. Labour ARM is committed to fair labour practices and freedom of association. The Company s policies are aimed at eliminating unfair discrimination and promoting equality in line with, inter alia, the South African Constitution, the Labour Relations Act, the Employment Equity Act and the Broad-Based Black Economic Empowerment Act, taking cognisance of the Universal Declaration on Human Rights, the Fundamental Human Rights Conventions of the International Labour Organization and the International Labour Organization Protocol. The Committee monitored and reviewed the implemen tation of labour policies including: attraction, retention and development of skills to support the Company s growth plan; employment equity; employee turnover; learnerships and bursaries; educational training and development of its employees; and literacy. Safety, Health and Environment ARM is committed to providing its employees with a safe and healthy work environment. The Committee monitored and reviewed the implementation of safety, health and wellness policies, including: safety performance, occupational health and wellness; and Tuberculosis, HIV & Aids. 146

28 Integrated Annual Report 2012 Corporate Governance The most significant environmental issues confronting ARM are climate change and resource management. The Committee monitored and reviewed the implementation of environmental sustainability policies including: environmental management; water management; land use management (rehabilitation and biodiversity management); climate change; and the status of ARM s participation in the Carbon Disclosure Project; Additional information may be found in the Sustainability review on pages 31 to 46 of the 2012 Integrated Annual Report and in the comprehensive stand-alone Sustain ability Report available on ARM s corporate website: Based on the foregoing, we are of the opinion that the Social and Ethics Committee has executed its duties and responsibilities during the financial year in accordance with the Companies Act and its Terms of Reference. On behalf of the Social and Ethics Committee Dr Rejoice V Simelane Chairman of the Social and Ethics Committee 17 October

29 Board of Directors 1 Patrice Motsepe (50) Executive Chairman BA (Legal), LLB 2 Mike Schmidt (54) Chief Executive Officer Pr Cert Eng 3 Mike Arnold (55) Financial Director BSc Eng (Mining Geology), BCompt (Hons), CA(SA) 4 André Wilkens (63) Executive Director: Growth and Strategic Development Mine Managers Certificate of Competency, MDPA (Unisa), RMIA 5 Mangisi Gule (60) Executive Director: Corporate Affairs BA (Hons) Wits, P & DM (Wits Business School) 6 Dr Manana Bakane-Tuoane (64) Lead Independent Non-executive Director BA, MA, PhD (Econ) 7 Frank Abbott (57) Independent Non-executive Director BCom, CA(SA), MBL 8 Tom Boardman (62) Independent Non-executive Director BCom, CA(SA) 148

30 Integrated Annual Report 2012 Corporate Governance 9 Anton Botha (59) Independent Non-executive Director BCom (Marketing), BProc, BCom (Hons), SEP (Stanford) 10 Joaquim Chissano (72) Independent Non-executive Director PhD 11 Mike King (75) Independent Non-executive Director CA(SA), FCA 12 Alex Maditsi (50) Independent Non-executive Director BProc, LLB, LLM 13 Dr Rejoice Simelane (60) Independent Non-executive Director BA (Econ and Acc), MA, PhD (Econ), LLB (UNISA) 14 Bernard Swanepoel (51) Independent Non-executive Director BSc (Min Eng), BCom (Hons) 149

31 1 Patrice Motsepe Appointed to the Board in Patrice Motsepe became Executive Chairman during Patrice was a partner in one of the largest law firms in South Africa, Bowman Gilfillan Inc. He was a visiting attorney in the USA with the law firm, McGuire Woods Battle and Boothe. In 1994 he founded Future Mining, which grew rapidly to become a successful contract mining company. He then formed ARMgold in 1997, which listed on the JSE in ARMgold merged with Harmony in 2003 and subsequently took over Anglovaal Mining (Avmin). In 2002 he was voted South Africa s Business Leader of the Year by the CEOs of the top 100 companies in South Africa. In the same year, he was the winner of the Ernst & Young Best Entrepreneur of the Year Award. He is also the Non-executive Chairman of Harmony and the Deputy Chairman of Sanlam. He is also President of Mamelodi Sundowns Football Club. 2 Mike Schmidt Appointed to the Board in Mike Schmidt joined ARM as Executive: Platinum Operations in July 2007 after 13 years with Lonmin Platinum where he was Vice President Limpopo operations at the time he left the company. Prior to that, he was employed by Hartebeestfontein Gold Mining Company. Mike was appointed as the Chief Executive Officer Designate of ARM and an Executive Director of the Company with effect from 1 September He has been the Chief Executive Officer of ARM since 1 March Mike Arnold Appointed to the Board in Mike Arnold s working career started in the mining industry in 1980 when he was employed as a geologist at Anglo American Corporation. He qualified as a Chartered Accountant (SA) in 1987 and completed his articles at a large South African auditing firm. Mike joined ARM in 1999 as the Group Financial Manager of Avgold Limited and in 2003 was appointed as its Financial Director. In 2004, Mike was appointed Executive Finance of ARM. Most recently, he was appointed as the Chief Financial Officer of ARM in André Wilkens Appointed to the Board in André Wilkens was appointed the Chief Executive Officer of ARMgold in He was then appointed the Chief Operating Officer of Harmony following the merger of ARMgold with Harmony in André subsequently served as Chief Executive of ARM Platinum, a division of ARM. André was appointed as Chief Executive Officer of ARM in 2004 and appointed to its Board in the same year. With the appointment of ARM s Chief Executive Officer on 1 March 2012, André became the Executive Director: Growth and Strategic Development based in the office of the Executive Chairman. The balance of André s 43 years mining experience was gained with Anglo American Corporation of South Africa, where he commenced his career in 1969 and culminated in his appointment as Mine Manager at Vaal Reefs in Mangisi Gule Appointed to the Board in Mangisi Gule was appointed Chief Executive of ARM Platinum on 27 February 2005 and in May 2007 he was appointed Chief Executive of ARM Coal, a role which he held until August Mangisi is currently Executive Director: Corporate Affairs. He has extensive experience in the field of man- age ment, training, human resources, communications, corporate affairs and business development. Apart from his qualifications in business management from Wits Business School, Mangisi has proven experience in leadership and mentorship. He has been a lecturer, as well as chairman of various professional bodies and a member of various executive committees and associations. He has also been an executive director and board member for ARMgold as well as an executive director and board member of Harmony. He is currently a director of ARM Coal, ARM Mining Consortium Limited and Modikwa Mining Personnel Services (Pty) Limited. He was appointed the chairman of the ARM Employment Equity and Skills Development Committee with effect from 1 July Dr Manana Bakane-Tuoane Appointed to the Board in Dr Manana Bakane-Tuoane became the Lead Independent Non-executive Director in Manana has extensive experience in the economics field. Her 20-year career in the academic field included lecturing at various institutions, including the University of Botswana, Lesotho and Swaziland (UBLS), National University of Lesotho (NUL), University of Saskatchewan (Sectional Lecturer) and the University of Fort Hare as Head of Department and Associate Professor. During this part of her career she was seconded to work in the public service, where she has held various senior management positions since Concurrent with the above, Manana has been a member and office bearer of several international organisations, including Winrock International and the African Economic Research Consortium (AERC). She serves as a non-executive director of Sanlam Limited and certain Sanlam trusts, Manana is also a Special Advisor (Economics) to the South African Minister of Water and Environmental Affairs. 7 Frank Abbott Appointed to the Board in Frank Abbott joined the Rand Mines Group in 1981, where he obtained broad financial management experience at an operational level. He was a director of various listed gold mining companies and was appointed as financial director of Harmony Gold Mining Company in Frank was appointed financial director of ARM in 2004 while remaining on Harmony s board as a non-executive director. In August 2007, Frank was seconded to Harmony as interim financial director and in August 2009 Frank retired as ARM s financial director. He is now an Independent Non-executive Director of ARM. Frank was appointed as the Financial Director of Harmony with effect from 7 February Tom Boardman Appointed to the Board in Tom Boardman was Chief Executive of Nedbank Group Limited from December 2003 to February He was previously Chief Executive and an executive director of BoE Limited, one of South Africa s leading private and investment banking companies which was acquired by Nedbank in He was the founding shareholder and Managing Director of retail housewares chain Boardmans, which he sold to Pick n Pay in The Boardmans chain of stores is now owned by Edcon. Prior to this he was Managing Director of Sam Newman Limited and worked for the Anglo American Corporation for three years. He served his articles at Deloitte. He is a non-executive director of Nedbank Group, Woolworths Holdings and Royal Bafokeng Holdings. Tom has also been appointed as a non-executive director of Kinnevik, a listed Swedish investment company. He is a director of The Peace Parks 150

32 Foundation and is the Chairman of The David Rattray Foundation and serves as a trustee on a number of other charitable foundations. 9 Anton Botha Appointed to the Board in Anton Botha is a director and co-owner of Imalivest, a private investment group that manages proprietary capital provided by its owners, the Imalivest Flexible Funds and a private hedge fund. He also serves as a non-executive director on the boards of the JSE Limited, the University of Pretoria, Vukile Property Fund Limited (Chairman), Sanlam Limited and certain Sanlam subsidiaries. He is a past president of the AHI (Afrikaanse Handelsinstituut). Anton spent most of his career as Chief Executive Officer of Gensec, building it into a leading South African investment banking group that became a wholly-owned subsidiary of Sanlam Limited in Joaquim Chissano Appointed to the Board in Joaquim Chissano is a former President of Mozambique who has served that country in many capacities, initially as a founding member of the Frelimo movement during that country s struggle for independence. Subsequent to independence in 1975 he was appointed foreign minister and on the death of Samora Machel in 1986 assumed the office of President. Frelimo contested and won the multiparty elections in 1994 and 1999, returning Joaquim to the presidency on both occasions. He declined to stand for a further term of office in His presidency commenced during a devastating civil war and ended with the economy in the process of being reconstructed. He served a term as chairman of the African Union from 2003 to Joaquim is also a non-executive director on Harmony s board. In 2006, Joaquim was awarded the annual Chatham House Prize, which is awarded for significant contributions to the improvement of international relations. He was the recipient of the inaugural Mo Ibrahim Prize for Achievement in African Leadership in Dr Rejoice Simelane Appointed to the Board in Rejoice Simelane commenced her career at the University of Swaziland, as a lecturer in Economics. Between 1998 and 2001 she worked at the National Department of Trade and Industry and at the National Treasury. She later served in the capacity of Special Adviser, Economics, to the then Premier of Mpumalanga until mid-2004, when she assumed the position of Chief Executive of Ubuntu-Botho Investments. Rejoice s board directorships include Sanlam Limited, Mamelodi Sundowns Football Club and the Council for Medical Schemes. A recipient of a CIDA Scholarship and a Fulbright Fellow, she also served as a member of the Presidential Economic Advisory Panel (PEAP) under former President Mbeki until In addition, she was a member of the Advisory Board of the Bureau for Economic Policy Analysis (BEPA) of the University of Pretoria. 14 Bernard Swanepoel Integrated Annual Report 2012 Appointed to the Board in Bernard Swanepoel started his career with Gengold in 1983, culminating in his appointment as General Manager of Beatrix Mines in He joined Randgold in 1995 as Managing Director of the Harmony mine. He was appointed Chief Executive Officer of Harmony in In August 2007 he left Harmony to start To-the-Point Growth Specialists. Bernard is a Non-executive board member of Sanlam Limited. He is the Chief Executive Officer of Village Main Reef. Corporate Governance 11 Mike King Appointed to the Board in Mike King served his articles with Deloitte, Plender, Griffiths, Annan & Co. (now Deloitte) and qualified as a chartered accountant (SA). He later became a Fellow of The Institute of Chartered Accountants in England and Wales (FCA). After 13 years with merchant bank Union Acceptances Limited, he joined Anglo American Corporation of South Africa Limited in 1973 as a manager in the finance division and in 1979 was appointed Finance Director. In 1997, he was appointed Executive Deputy Chairman of Anglo American Corporation. He was the Executive Vice-chairman of Anglo American plc from its formation in May 1999 until his retirement in May Mike is a non-executive director of a number of companies. 12 Alex Maditsi Appointed to the Board in Alex Maditsi is employed by Coca-Cola South Africa as a Franchise Director for South Africa. Previously, he was Country Manager for Kenya, Senior Director Operations Planning and Legal Director for Coca-Cola Southern and East Africa. Prior to joining Coca-Cola, Alex was the Legal Director for Global Business Connections in Detroit, Michigan. He also spent time at Lewis, White and Clay, The Ford Motor Company and Schering-Plough in the USA, practising as an attorney. Alex was a Fulbright Scholar and a member of the Harvard LLM Association. 151

33 Steering Committee Mike Schmidt Chief Executive Officer Mike Arnold Financial Director Mangisi Gule Executive Director: Corporate Affairs André Wilkens Executive Director: Growth and Strategic Development Alyson D Oyley Company Secretary André Joubert Chief Executive: ARM Ferrous Bennie Boshielo Executive: ARM Platinum Corporate Affairs Busi Mashiane Executive: Human Resources Chris Blakey-Milner Leader: Risk Management Claus Schlegel Executive: ARM Exploration Dan Simelane Chief Executive: ARM Copper Director Matlala Leader: Transformation Francois Uys Executive: ARM Platinum Graham Butler Executive: Exploration and Project Investment Imrhan Paruk Executive: Corporate Development Jan Steenkamp Chief Executive: ARM Exploration and Technical Services 152

34 Integrated Annual Report 2012 Corporate Governance Johan Pistorius Chief Information Officer Jongisa Klaas Head of Investor Relations and Corporate Development Mandla Tobela Executive Legal: ARM Ferrous Mark Bräsler Executive: Operations Support Nerine Botes-Schoeman Executive: Sustainable Development Peter Manda Executive: Legal Pierre Joubert Executive: ARM Copper Operations Princess Thwala Executive: ARM Ferrous Rilette Avenant-Buys Executive: Logistics Sandile Langa Executive Legal: ARM Coal Steve Mashalane Senior Executive: ARM Corporate Affairs Stompie Shiels Executive: ARM Business Development and Investor Relations Thando Mkatshana Chief Executive: ARM Coal Zandile Moseke Human Resources Manager: Corporate 153